I do not understand Debt Counselling fully????

[Dave A]

Gfacius - reading all those different irons you have in the fire, my kneejerk reaction was pick something and focus on it. Diffused effort is a common reason for poor results - focused effort is unstoppable. You only need one winner right now. You can add others later.

A second thought is creditors just want their money, just like you or anyone else when you're owed money. They're not investors in your plans - why should they finance you?

Third - you have a choice. Make the debt agreement work and keep your assets, or forfeit all your assets and start fresh from a fairly clean slate (with no access to credit for the next 5 years etc.). There is no middle road here. (Which isn't the point I'm trying to get to - but this is it...)

It's your choice!

You're right - you're running out of time. In fact you've run out of time. You're in overtime.
There is no time to indulge in the "woe is me" and "the ship's turning" stuff. Things need to happen now!

You need to make it happen NOW!
Get into overdrive.
Who can you call to make a sale right now!
And the next person.
And the next.

No time to feel sorry for yourself.
No time to feel tired.
No time to feel self-concious or whatever else might be holding you back.
Time to get a$$ into gear and do what it takes to make sh!t happen.

[RvanEck]

I am no expert, but this is the way I see it:
If you are struggling, you had the right to seek debt counselling. You then need to make a NEW commitment of what you can pay. This may be accepted or rejected. Now once you failed to keep to the new plan, then you are in deep trouble, as you have now lost the protection offered by the law that must protect you.... I do not think you get another change to make a new deal. They may declare you insolvent if they wish...

[SilverNodashi]

GFacius, what does your business need in order to grow and pay you a better salary?

[murdock]

Murdock - you should know your facts before making such comments on a live forum which are clearly false and defamatory. I invite you to come and sit in my office or any other debt counsellors office for one week to see the truth of what really occurs.

so let me get my fact straight then on a live forum before i make another comment...let me then ask you a few question so that i can get my fact straight...

you dont make any profit/interest out of your customers?
You make absolutely no money from the people who come to you with debt problems?
who pays your staff and your salary?

[theDCI]

Hi Gfacius - If you do not have a court order in place, your debt counsellor can do a change on your proposal, debt counsellors are suppose to do annual assessments in which these factors are taken into consideration. If you have a court order in place it will be far more difficult.
You can try to pay your creditors directly but I can almost promise you, they will not honor it for more than 6 months, especially if a bond and vehicle is involved. But if you feel like this is a solution then you must do it, but there is no protection for you. If sequestration is what you need, then you do not need to pay R15,000 to get it done. Sequestration product ? If it is a product that says you can live in your house even though it has been sold, or it will allow you to buy your house back in a few years DO NOT DO IT - it is a scam and unlawful. There are sequestration attorneys on theDCI that we have brokered a deal with, that they will charge you R6800. And just incase you are wondering, no I do not make a cent out of any client that use's them.

[theDCI]

Murdock - like I said in my previous post, come and sit in my office or any other DC's to see the truth of what actually occurs.
In terms of profit / interest from consumers, the answer is absolutely not.
Do you work for nothing or any other professional ?
A debt counsellor is not a charity, even though many of us do work for nothing for many clients. Being paid a professional fee is no different from any other profession.

[theDCI]

Kevin - There is a difference between facts and assumptions.
Once again I ask, can anyone show me one industry or profession whereby fraud, theft and using a con to take people for a ride does not exist ?

Why would someone assume that every debt counsellor and the entire industry is painted with the exact same brush as those who have done people in ?
If you all have statistical data proving the above then please show it to me as it is something I have not seen.
The statistical data that can be shown to you, are the tens of thousands of SA that have saved their assets and lives because of the debt review process.

It is always better to try and see the entire picture, rather than just one side of the frame.

[murdock]

thanks for the offer...but i have no need to come to your office...however i am sure there are lots of people on this forum and others...who would like to know what it is exactly debt councilling companies do and how they derive an income...maybe people like myself...have just heard too many bad things....maybe it is not always the company which is the problem but rather the customer...as we all know there are bad elements in all industries/fields...here you have a good opitunity to clear up some misunderstndings or myths about debt councilling

what do debt councilling companies do?
how do they make a living?

if i am in R100 000 worth of debt and am missing payments...why do i go to a debt councillor?

how do you make a living...do you charge by the hour for your services or do you lend people money?

help us to understand...what debt councilling is all about...and why it is not such a bad thing as people make it out to be...personally when i hear debt councilling...i see loan shark...please clear up this misconseption.

this could be better started in a whole new thread...leave it up to dave to make the call.

there are a variety of reasons why people get into debt...

mismanagement of their finances...bad customers
lose of employment...
motor vehicle accident...(as in my case many years ago)
winning/earning lots of money...buying lots of material...then cannot keep up and maintain the lifestyle...

but lets rather look at "debt councilling" how did they come about and what is your primary function in a society which unfortunetly has got to a stage where most people are living on plastic and credit.

[Dave A]

personally when i hear debt councilling...i see loan shark...please clear up this misconseption.

Loan shark or just shark?

I suppose I can see where the "shark" association comes from - all too easy to see the industry as one that takes advantage of others' troubles.

I must say at the early stages of the debt counselling industry, I had serious reservations about whether they woud really be adding value. It is, after all, an extra cost on top of an already heavy debt burden. But the industry has become more professional.

There is a much better understanding of what processes work and what doesn't. Handling of payments received and distribution is much improved, with better reporting systems making this more transparent. And then the big win was a breakthrough agreement on reduced interest rates and extended payment periods with the banks.

So there is potential there for the debt counselling industry to be a real source of value for society. And in fairness the industry is starting to realise it.

What troubles me is there remains no accountability for the school fees of this industry paid by some of their early clients. There are cases where the negligence, incompetence and in one case I'm aware of outright fraud of the debt counsellor has cost their client dearly, and ordinarily would attract a civil lawsuit to recover damages. Of course, the over-indebted client doesn't have the funds to institute such a lawsuit, and must suffer their losses as authorities and the industry try to sweep these cases under the carpet.

...but they don't suffer their losses in silence...

And it's clients' views shared that ultimately is the reputation of an industry.

[theDCI]

Murdock - the debt counsellors work is to help restructure the clients debt.
What this means is doing a financial assessment and looking at their income v.s their living expenses and debt. Making sure that if they have a car they are insured, if they have a bond, life cover is in place. Although debt counsellors are not financial service providers, they have to ensure clients risks are covered. A budget is then drawn up that the client agrees on, as they are the one's that have to honor the payments. In between all of this a 17.1 and 17.2 is sent out to the credit providers requesting balances. One is lucky of these come in, if not it is a constant fight to please send these. Payment instructions are issued to the client for the debt counsellors fee, the application fee, ITC report and legal fee. Once this is done, the debt counsellor will work out a proposal for all credit providers and this has to prove how the client will get out of debt. This is where the big fight comes in, as there are certain laws which the credit providers do not think they have to abide by. One of these rules is in duplum and another prescription.
Although there are industry rules which states that banks will lower interest, it is nothing but a press hype as in real terms, unless you use the credit providers software, which leaves out the possibility to claim for reckless lending, in duplum or prescription, they fight you if interest is lowered. The industry was informed in January 2011 that interest could be lowered, the press announcement was done 6 weeks ago ! This was done for another program that banks want to bring in which is like debt counselling, only the credit providers version. This has been stopped for further investigation by the NCR.
Once the proposal has been completed, the court matter must be set but in between all of this, clients get harassed by the banks, told their debt counsellor is stealing their money and that debt counselling is not working. The courts can take months to hear a case and until the court order is granted, the counsellor fights daily for the rights of the consumers.
The debt counsellor must also, ensure payments are made, if not send out notification for problems along with a new payment plan.
Sort out all queries from the client, the banks who lose monies paid over to them by the pda's, the pda's who change systems without notifying the debt counsellors only for payments not to occur as per the instruction that the debt counsellor gave over to them, fight banks attorneys who are trying to terminate the clients unlawfully, fight of further legal action, send letters of harassment to the NCR and Tribunal in the hope of some relief for the client, appear in court when needed, be the clients counsellor if anything occurs that could affect their payments.

Fees: R50 application fee, R50 ITC fee (per person). Debt counsellors fees are as little as R100 up to the max of R6000 once off (combines even for a joint application). Legal fees can range from R1500 - R6000 depending on attorney. Most attorneys will charge what the counsellor got paid to be fair to client who can only afford R500. There is a monthly fee of 5% for the first year which decreases to 3% from second year to clearance of client. There is however a max set on this 5% and 3% fee of R450 (combined even for a joint application)...and now you can see why debt counsellors are closing their doors for business. The running costs are very high in comparison to what you get. If your client does not pay the pda, the counsellor does not get paid, even though they still need to make the many phone calls, send out a ton of emails daily and try and protect a client from attorneys.

Many people got into debt counselling to make a quick buck - they have all left - the ones that are left standing are the real counsellors. The large companies in debt counselling are nothing like the single debt counsellors and advise to any consumer looking to see a debt counsellor - the smaller ones will do all the work themselves, they counsel the clients, have a personal relationship with clients, they are the real professionals.

Determined to set the record straight on issues with the press, as well as with the public, you are more than welcome to take a look on http://www.facebook.com/theDCI and see the our articles that have been in the press.

[Just Gone]

DCI

Why would someone assume that every debt counsellor and the entire industry is painted with the exact same brush as those who have done people in ?

NO-ONE assumed this about EVERY debt counsellor - Please read properly before you get on your high horse !!

[theDCI]

Dave - what many people don't understand is that the banks, attorneys, consumers and pda's have all made the debt counsellors their escape goat.

Banks loose money paid over to them as they change account numbers without notifying the pda or DC.
Attorneys steal clients money by not completing mandates which they have been paid for in full.
Consumers do not stick to their payments, do not notify the DC and either make no payments or short payments which is immediate termination if no notification has been sent out. The Festive Season is the worst month for this as come Jan, a Summons is waiting for them and from a legal perspective, the DC's hands are tied.
PDA's do not always pay the money over as they should, there are only 2 that should be used.
Some Magistrates have no clue about the NCA or the rulings and very little money has been spent on educating the judicial system.
...But for all of these mentioned, it is only the DC that gets blamed.

With very little infrastructure in place, little to no support from from Associations, loop holes in the NCA that banks have found, debt counsellors literally getting thrown into the sea with no clue on how to swim, with no life jacket or raft in a sea invested by real sharks....the debt counselling industry is the most successful industry in SA as no other has had an ongoing 5 year war. Yet despite all the above issues, have still saved tens of thousands of homes, cars and lives. The debt counsellors who have been around for a while are real pioneers and despite all the odds, have proven to be a real David and Goliath story.
There is a big shake up currently happening inside the industry - this will be for the betterment for consumers and may finally prove to many a SA, the real value that a debt counsellor carries for the economy of SA.

Unfortunately the consumers that have been wounded or killed, never knew that there was recourse for them to use. They could have used the NCT / Tribunal, NCR or Ombuds to help them at no charge. Like every war - there are always the one's who got caught up in the cross fire.

Hope you all have some better understanding and clarity on many of the mentioned issues.

[murdock]

thanks for taking the time to respond...

[Gfacius]

A budget is then drawn up that the client agrees on, as they are the one's that have to honor the payments.

Hi DCI,

OK, I forgot to mention a very important factor that has been eating at me inside which is probably what started me off with this whole issue in the first place.
I was very uncomfortable to take my problems to a debt Councillor but my wife was insisting and nagging that we do. I am the kind of person that has a very good "6th Sense" about people. I kinda get a inner vibe that tries to warn me if I'm doing the right thing or not.

This is what bothers me with the debt counselors that we have now used...

From the word go when we went to see them we all sat down around a very small table and discussed the pro's & con's of debt review. The issue that was of most importance to me was simply "What will we now pay each month towards our debt"
They asked me what we could afford per month and we worked out R6500. (I was thinking just for about 6 months)

My house bond at that time was R7409, My car R2683, my wife's car R1631, Credit cards combined R949 all this totaled R12'672.
The credit cards weren't really a problem as we were at that time paying a very small amount in, just to keep the bank quite. This was working but the debt counselors insisted on the actual monthly payment must be quoted or worked in?

To cut a long story short...

The debt counselor came back to us and said that the creditors don't accept your payment plan of R6500 but will accept R10'171 (with protection)?

As we were desperate and ignorant to 'Debt Review' we felt we had to accept.

I still feel that we are being ripped off by someone or the system?

It's a no win situation either way unless you have money? So what is the point of all this then. Now I am just being completely forced to pay what I cannot and this is why I said I have sealed my own fate?.

It's like when a debit order comes off my bank lets say for ADT, Insurance, Vodacom etc. and I don't have enough funds available, my bank returns them unpaid and then charges me R115 for each item returned??? I mean its ridiculous. It feels as if everyone that has financed you one way or another are now like vultures feeding off the last of me until there is nothing left. This is how I am feeling and don't no what else to do.

[Dave A]

Unfortunately the consumers that have been wounded or killed, never knew that there was recourse for them to use. They could have used the NCT / Tribunal, NCR or Ombuds to help them at no charge.

I take it you didn't read that thread I linked to... approaching the ombud proved useless.

But thanks for your posts anyway - a valuable insight into the current state of play.